Self-employment in Urban China: Entrepreneurship or Disguised Unemployment?

To explore the mechanism of entry to the self-employed sector in urban China, this study tested two hypotheses: the entrepreneurship hypothesis and the disguised unemployment hypothesis, investigating the impact of mass entrepreneurship and innovation policies on business start-ups. Three main findings emerged. First, the entrepreneurship hypothesis was rejected for both local urban residents and migrants in 2013 but was supported for both groups in 2018. Second, the causality relationship between mass entrepreneurship and innovation policies and business starts-ups was not significant. Third, the results differed by group. The entrepreneurship hypothesis was supported for the younger generation of migrants in 2018 but was clearly rejected for the less educated, both in the local urban resident and migrant groups in 2013 and 2018. Robustness checks confirmed these conclusions.